The employee of a property management firm who was jailed for embezzling $820,000 was a construction services firm unit’s authorized representative, therefore the firm is not entitled to coverage under an exclusion in its crime policy, said a federal appeals court in upholding a lower court’s ruling in favor of a Chubb Ltd. unit.

Units of Maple Grove, Minnesota-based C.S. McCrossan Inc., which owned commercial rental properties, had agents to manage its properties. These agents in turn hired Minneapolis-based Balderson Management to manage the properties, according to Monday’s ruling by the 8th U.S. Circuit Court of Appeals in St. Louis in C.S. McCrossan Inc. v. Federal Insurance Co.

Balderson’s owner and principal, Cynthia Balderson, managed the properties with the help of her daughter, who was the primary user of Balderson’s property management system, the sole copy of which was on her computer.

Over the course of several years, the daughter stole a total of $820,00 by creating fake invoices payable to herself or for her benefit, manipulated the system to show payment to a vendor, and forged her mother’s signature on each check.

 She pleaded guilty to eight counts of theft by swindle and was sentenced to 80 months imprisonment, according to the ruling. According to a news report, she had taken additional funds from other firms as well.

McCrossan sought coverage under its crime policy with Chubb Ltd. unit Federal Insurance Co., which denied coverage. McCrossan filed suit in U.S. District Court in Minneapolis, which ruled in Chubb’s favor.

The ruling was affirmed by a three-judge appeals court panel. One of the units that hired Balderson was wholly owned by a McCrossan individual, and therefore was not considered an insured subsidiary covered under the policy, said the ruling.

The ruling also held that the daughter was an “authorized representative” of another McCrossan unit, Blakely Properties LLC, and therefore the policy’s “authorized representative” exclusion applies.

It is undisputed that “Blakely made Balderson its agent for property management, Blakely knew (the daughter) worked at Balderson on its accounts, and Blakey did not object to her working there,” said the ruling.

The “authorized representative exclusion unambiguously applies here, where Blakeley’s empowerment of (the daughter) to act on its behalf enabled her crime,” said the ruling, in affirming the lower court’s summary judgment in the case.

Chubb’s attorney had no comment, while McCrossan’s attorney could not be reached.

A federal appeals court affirmed a lower court’s summary judgment, holding Federal Insurance was justified in denying coverage for a crime policy on the basis that any loss caused by one employee is considered a single loss under the policy, in a 2016 ruling.